Global equities extended their broad retreat on Wednesday, as investors sought out the relative sanctuary of bonds, driving yields down to multi-year lows, amid fears over persistent trade tensions between the US and China in a fresh wave of risk aversion.
Further pressure came overnight, in the form of two strongly worded editorials in state-controlled Chinese newspapers, which suggested China should weaponize its dominance in the rare earth metal and mineral market against the United States.
This proposal comes after President Donald Trump’s comments on ‘not being ready’ to make a deal with China, during a four-day state visit to Japan, and could see China ban exports on 17 crucial metals and materials into the US, used in products ranging from; smartphones, to electric car batteries, to satellites, to advanced precision weapons.
These moves in pre-market look to compound upon yesterday’s losses, where Wall Street erased early gains to finish in the red following the long weekend, as growing trade tensions between the US and China kept investors in a cautious mood.
The S&P 500, which had climbed as much as +0.5% earlier in the session, saw it value drop -0.93% by session-close. Of the 11 S&P 500 sectors, only Communication Services (+0.44%) managed to record a gain. Amongst the leading decliners where; Utilities (-1.64%), Consumer Staples (-1.63%) and Healthcare (-1.43%) stocks.
Ahead, in today’s economic calendar, Wednesday includes; a Richmond Fed Manufacturing Index figure for May at 10am EST.
In earnings; Palo Alto Networks (PANW), Dick’s Sporting Goods (DKS), Abercrombie & Fitch (ANF) and PVH Corp. (PVH) are amongst the major companies scheduled to report their latest financials today.
TODAY’S TOP HEADLINES
China & Trade: China Gears Up to Weaponize Rare Earths in Trade War. (CNBC)
Beijing is gearing up to use its dominance of rare earths to hit back in its deepening trade war with Washington. China supplies about 80% of US imports of rare earths, which are used in a host of applications from smartphones to electric vehicles and wind turbines.
Today’s Economical Announcements.
10:00AM – ★☆☆ – Richmond Manufacturing Index (May) (Previous: 3)
STOCKS IN THE SPOTLIGHT
Pre-Market Movers & News Related Stocks.
Abercrombie & Fitch (ANF): [EARNINGS] Lost 29 cents per share for its latest quarter, smaller than the 43 cents a share loss that analysts were anticipating. Revenue topped estimates as well, although a comparable-store sales increase of 1% fell slightly short of the 1.3% consensus estimate.
Canada Goose (GOOS): [EARNINGS] Reported adjusted quarterly profit of 9 cents per share CAD, beating the consensus estimate of 5 cents a share. Revenue was below estimates, however, and Canada Goose also gave a weaker-than-expected outlook.
Capri Holdings (CPRI): [EARNINGS] Reported adjusted quarterly profit of 63 cents per share, beating estimates by 2 cents a share. The luxury goods retailer’s revenue also came in above forecasts, helped by strength at its Versace and Jimmy Choo brands. Capri gave a weaker-than-expected current-quarter forecast, however, as it spends more on marketing and new store openings.
Dick’s Sporting Goods (DKS): [EARNINGS] Beat estimates by 4 cents a share, with adjusted quarterly profit of 62 cents per share. Revenue beat forecasts as well. Dick’s also raised its full-year outlook.
Heico (HEI): [EARNINGS] Reported quarterly profit of 60 cents per share, 11 cents a share above estimates. Revenue came in well above forecasts and the aircraft parts maker raised its financial forecast for the year.
General Mills (GIS): [DOWNGRADE] Downgraded to “sell” from “neutral” at Goldman Sachs, which said that its December prediction that short term strength might be followed mounting deceleration is now playing out.
Devon Energy (DVN): [NEWS] The energy producer announced the sale of its Canada business to Canadian Natural Resources for $2.8 billion. Devon plans to use the proceeds to reduce debt.
Bed Bath & Beyond (BBBY): [NEWS] Has added four new independent directors to its board, in a settlement with an investor group consisting of Legion Partners Asset Management, Macellum Advisors, and Ancora Advisors. The group said it was pleased with the move.
Amazon (AMZN), Facebook (FB), Trade Desk (TTD), Twitter (TWTR): [RATINGS] In a report on internet advertising, Pivotal Research said that it would pay to be selective in this area, and issued “buy”, ratings on these four stocks because of their leadership positions, among other factors. It rates Alphabet (GOOGL), Snap (SNAP), and Pinterest (PINS) at “hold.”
Workday (WDAY): [EARNINGS] Earned an adjusted 43 cents per share for its latest quarter, beating estimates by 2 cents a share. The maker of human resources software’s revenue come in above forecasts, as it signed up more business subscribers.
Boeing (BA): [NEWS] The 737 Max jet may not return to service until August, according to the head of the International Air Transport Association.
Uber Technologies (UBER): [NEWS] Uber CEO Dara Khosrowshahi told the German newspaper Handelsblatt that the ride-hailing company will not achieve profitability in the next year or two, but that it will come.
T-Mobile (TMUS), Sprint (S): [NEWS] The two wireless carriers could sell the prepaid wireless brand Boost Mobile for up to $3 billion, according to interested bidders who spoke to Reuters.
Morningstar (MORN): [NEWS] The financial information company announced the acquisition of credit ratings agency DBRS for $669 million.
GAINERS: PLAN, SEAS, AMD, ARWR
DECLINERS: NTNX, EOLS, CROX AFIN, KHC, FAF, MYL, FL, STZ
Blue Hat Interactive Entertainment (BHAT) (Price: 4) (bst. Vol: $7.2M)